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Aluminum ingots waiting to be shipped from a processor. Financial institutions like Goldman Sachs have used industry pricing regulations to earn millions of dollars each year.
This 2013 excerpt is from the New York Times, July 20 , by David Kocieniewski.
Americans pay a fraction of a penny more for each aluminum article because Goldman Sachs and other financial players manipulate regulations, costing consumers billions of dollars.
A Goldman subsidiary stores customers’ aluminum. Two or three times a day, sometimes more, their drivers load in one warehouse. They unload in another. And then they do it again.
The back-and-forth lengthens the storage time. And that adds many millions a year to the coffers of Goldman. It has cost American consumers more than $5 billion over the last three years.
The maneuvering in markets for oil, wheat, cotton, coffee and more have brought billions in profits to investment banks like Goldman, JPMorgan Chase and Morgan Stanley, while forcing consumers to pay more every time they fill up a gas tank, flick on a light switch, open a beer or buy a cellphone. In the last year, federal authorities have accused three banks, including JPMorgan, of rigging electricity prices.
In the case of aluminum, Goldman bought Metro International Trade Services, one of the country’s biggest storers of the metal. More than a quarter of the supply of aluminum available on the market is kept in the company’s Detroit-area warehouses. Before Goldman bought Metro International three years ago, warehouse customers used to wait an average of six weeks for their purchases to be located, retrieved by forklift and delivered to factories. But now that Goldman owns the company, the wait has grown more than tenfold — to more than 16 months. The delays are so acute that Coca-Cola and many other manufacturers avoid buying aluminum stored here. Nonetheless, they still pay the higher price.
The vast majority of the aluminum being moved around Metro’s warehouses is owned not by manufacturers or wholesalers, but by banks, hedge funds and traders. They buy caches of aluminum in financing deals. Once those deals end and their metal makes it through the queue, the owners can choose to renew them. About 90 percent or more of the metal moved at Metro each day goes to another warehouse to play the same game.
This 2013 excerpt of PropertyForum, Oct 25, is by Mark Benson.
The Norwegian government has had a sovereign wealth fund, which collects income from their oil, for many years now and it was worth $810 billion at the last official valuation.
While the managers of the Norway sovereign wealth fund have already been looking at the European property market, a revelation today shows that there could be a significant investment in worldwide property by the fund in the short to medium term.
As the price of UK property continues to move higher and higher there are now serious concerns that first-time buyers may become a thing of the past.
European property appears on the surface to be undervalued on a long-term basis although there are concerns that Spanish and Portuguese banks in particular are about to dump an array of unwanted properties on the market.
The UK property market is seen as something of a safe haven in light of problems within Europe and with investors such as the Norway sovereign wealth fund looking towards the UK in the short term and Europe in the medium to longer term.
Banking giants from Wells Fargo to Fannie Mae are routinely paying top dollar on the auction steps to hold onto their own distressed properties, outbidding cash offers and paying well above assessed value.
This 2013 excerpt of the Herald-Tribune, Jly 6, is by Josh Salman.
Speculating that properties will appreciate even more in the next couple of years is a shift from the years after the nadir of the foreclosure crisis, when mortgage lenders accepted any fair offer to avoid the hassle of listing the default.
The competition between lenders and billion-dollar investment funds could drive housing values higher through the kind of price speculation that marked the walk-up to the Great Recession, beyond what most working families can afford.
The trend could suffocate short sale and loan modification approvals for delinquent borrowers.
Banks can control prices and inventory, and trickle these properties onto the market at their own pace.
Banks do not have to pay out-of-pocket until they bid more on an auction than what a court judgment deems they are owed on the foreclosure. That is a fairly rare phenomenon.
This 2013 excerpt is from Biological Sciences, October 4, by Katie R. Billings.
Infants as young as three-months-old have innate preferences for altruistic individuals.
Infants between the ages of six and ten months watched a series of puppet shows. The infants selected their favorite puppet. Over 80 percent of the infants chose the “helpful” puppet, a surprisingly high, statistically significant percentage.
Basically every single baby chose the nice puppet… totally surreal.
Infants only three-months-old were given the same puppet show. SResearchers used eye trackers to determine the children’s preferences. The eye tracking results revealed that infants showed a clear aversion toward the “unhelpful” characters.
Babies are born with a set morality – a clear preference toward altruistic behavior. Infants as young as three-months-old can already evaluate others based on their actions, long before they are taught to do so.
New figures underline the depth and extent of Londoners’ concerns about spiraling accomodation costs.
This 2013 excerpt is from The Guardian, Jun 22, by Dave Hill.
Londoners’ deep anxiety about their housing costs is much more widespread compared with the rest of the country. Over a third are already concerned about their ability to pay their rent or mortgage, 45% are worried that they won’t be able to meet their payments in a year’s time, and that 53% are caused a great deal or a fair amount of stress by the expense of their accommodation.
The British average for concern about ability to meet costs now was 23%, while worry about a year into the future was 33% and the stat for stress was 36%.
Yhe cost of renting privately in London has risen by an average of 3.1% in the past year while average incomes have fallen.
This 2013 excerpt of the Huffington Post, Oct 16, is by Adam Grant, author of Give and Take, a New York Times and Wall Street Journal bestseller.
Most people assume that strategic optimists outperform defensive pessimists, because they benefit from confidence and high expectations. Defensive pessimists were more anxious and set lower expectations for themselves. Yet they didn’t perform any worse.
By imagining the worst-case scenario, defensive pessimists motivate themselves to prepare more and try harder.
Strategies that prove effective are often the reverse of what you expect.
We think it’s a good idea to encourage people, but not so fast. Defensive pessimists did significantly worse when they were encouraged. The encouragement boosted their confidence, quelling their anxiety and interfering with their efforts to set low expectations.
When people are anxious, we sometimes tell them to distract themselves. Once again, this doesn’t pay off for defensive pessimists. Taking time to worry helps them generate the anxiety necessary to motivate themselves.
In the U.S., we favor optimists over pessimists. When economists surveyed more than 1,000 U.S. CEOs, they found that more than 80 percent scored as “very optimistic.”
We need pessimists to anticipate the worst and prepare us all for it.
Ultimately, both styles are deadly at their extremes. Pessimism becomes fatalistic, and optimism becomes toxic. The key is to find the sweet spot, the more moderate ranges that combine the benefits of both approaches.
This 2013 excerpt of Bloomberg, Jun 21, is by Janice Kew.
South Africa’s growing black middle class: 4.2 million people strong last year and double what it was in 2004.
The country now has more middle-class blacks than white, and the group spends more annually as well.
The newly affluent are moving from townships and the countryside to formerly whites-only suburbs, boosting the revenue of companies from car retailers to supermarkets.
Since 1994, national income per capita has climbed 40 percent, access to power has risen to more than 80 percent of the population from 50 percent and more than 3 million houses have been built.
Of a population of 53 million people, the number of black South Africans classified as the middle class rose from 1.7 million in 2004, the study showed.
While South Africa’s middle class is growing, the unemployment rate of 25.2 percent is the highest of more than 30 emerging-market nations. Income inequality has widened since 1994, with 35 percent of the population living on less than $51 a month. The Gini coefficient, a measure of inequality in which a reading of zero means society is totally equal, worsened to 0.63 in 2009 compared with 0.59 in 1993.
South Africa had a record 173 protests by township residents last year over a lack of housing and basic services.
This 2013 excerpt of Bloomberg, Oct 15, is by Victoria Stilwell.
In all but two quarters since the beginning of 2011, “hair,” “eggs,” or “kidney” have been among the top four autofill results for the Google search query, “I want to sell my…,” according to Nicholas Colas, chief market strategist at New York-based ConvergEx Group, which provides brokerage and trading-related services for institutional investors.
At Shady Grove Fertility Center, which has offices in Washington, Virginia, Maryland and Pennsylvania, about 13,000 women will apply this year to be an egg donor. That’s roughly a 13 percent increase from 2012.
Payrolls are still down 1.9 million employees from the January 2008 peak. The share of unemployed Americans out of work for 27 weeks or longer was 38 percent in August. Median household income, which includes wages and investments, has fallen every year for the past five after adjusting for inflation.
Egg donors receive compensation at almost every step of the process, earning $7,000 by the time they finish their first donation cycle.
While Americans can legally sell hair, breast milk and eggs, the sale and purchase of a kidney in the U.S. is against the law. While the sale of kidneys is limited to the black market, the organ could fetch $15,200 if legal monetary incentives for donations were introduced.
This 2013 excerpt of the BBC, Oct 21, is by Linda Yueh.
Singapore is one of only a handful of countries to have managed it in the past half century. A colonial outpost now has the third highest average income in the world. How did it do it? And why are social tensions now showing?
Singapore has more millionaires per capita than anywhere else in the world. One in six households are in the millionaire club. They come to this city-state by design. The government offers low taxes, raising their revenues through a property tax on the expensive, multi-million dollar houses of the ultra-rich. In return the rich spend – boosting the local economy’s shops, restaurants and even a Universal Studios.
It is a city-state with about five million people so the scale isn’t comparable to the challenges of a country.
That makes its ability to be a large manufacturer all the more surprising. Manufacturing accounts for more than one-fifth of the economy, which is a larger share than in Britain and the US.
Skilled workers also come from all over the world. Two out of five people in Singapore are foreigners. Bankers and others in the financial industry have moved to what has become the Switzerland of Asia.
For Singaporeans who are working in blue collar jobs, the arrival of lower paid foreigners creates social tension. There are concerns over congestion in public transport and housing.
Singapore made itself an internationally oriented economy and that has largely paid off for its people. Cracks are showing in the orderly facade — but for most people, their working lives have benefitted.
This 2013 excerpt of the New Zealand Herald, July 27 is by Anne Gibson.
The Cornwall Park Trust Board is a registered charity which owns the park, along with 23.4ha of surrounding land gifted to it by Auckland’s founding father, Sir John Logan Campbell.
The residential land was subdivided from 1910 to 1923 into 110 sections to provide leasehold income to pay for the upkeep of the park.
As the latest round of 21-year leases expire and are reset based on current market values, rentals have gone through the roof and feelings among the lessees are running high.
The board argued successfully that the value of the land should be based on the highest and best use of a property, unconstrained by any development.
Since then disillusioned leaseholders have been voting with their feet. Properties worth at least $6 million are up for sale and at least one has simply walked away.
An auction in September 2011 failed to draw a single buyer.
Freehold: Includes the house and the land. Leasehold: Includes the house but not the land, so the house owner pays “ground rent” to the land owner.
Purchasing a leasehold property can be a way of acquiring a property in a prime real estate area at low cost, compared to the cost of purchasing the freehold in such a property. However, purchasers of leasehold properties need to understand the obligations they are taking on and the economics of the purchase.
This 2013 excerpt of New Indian Express, Oct 27, is by Express News Service.
The Economic Offences Wing (EOW) of the Crime Branch on Saturday arrested three brothers for allegedly making a false claim on a whopping 113-acre Government land in Mundali, about 30 km from Bhubaneswar.
Presenting 70-year-old land rent (khazana) papers, the family had staked claim over the land which is still in occupation of the State Government in Mundali mouza under Barang tehsil.
The trio was identified as Dhananjaya Mohapatra, Surendra Mohapatra and Jagannath Mohapatra.
A Joint Commissioner level officer of Consolidation and Settlement wing is also under scanner of the EOW for prima facie not turning down the claim filed by the family seven years ago.
Interestingly, even as EOW was probing the case, it wrote to the Revenue and Disaster Management Department seeking to know who was posted as the Joint Commissioner at that time only to receive a reply that no officer in that rank was at the helm in 2006.
Tax plan born but never used in Philly gets traction in Connecticut, copying a Pennsy tax that grows its base.
This 2013 excerpt of the City Paper, July 25, is by Ryan Briggs.
Connecticut Gov. Daniel Malloy signed into law House Bill 6706, setting in motion a process by which certain municipalities would be able to implement something called a Land Value Tax (LVT). LVT is a form of property tax that only taxes the value of land, and not improvements on the land.
The legislation was authored with help from the obliquely named Center for the Study of Economics (CSE), a spin-off of the Henry George Foundation of America. The foundation was created to carry on the mission of the Victorian-era economist Henry George, who was born in Philadelphia and advocated for LVT. The eponymous foundation has been working since the 1930s to carry on his vision.
After languishing for a good century or so, the taxation formula has piqued the interest of city administrators in a number of older American cities that have struggled with abandonment and vacant land.
The purses for winning the Scottish Open and Open Championship came to $2.1 million.
This 2013 excerpt USA TODAY, July 23, is by Nate Scott.
Not so fast with that cash, Lefty.
Phil Mickelson will sacrifice 61% of his earnings for winning both the 2013 Open Championship and the Scottish Open, all of which will go in taxes to the British and U.S. governments and to the State of California.
Great Britain still collects taxes in Scotland, where the Open Championship was held this year. (Scotland will start collecting its own taxes in 2016.)
Forty five percent of Mickelson’s winnings will go to Great Britain, with 13% going to California and the remaining going to the United States government.
Doubling the pain? Mickelson also won the Scottish Open the week before the Open Championship, which will be taxed at the same rate. For winning both tournaments, Mickelson earned £1,445,000, or about $2,167,500. After taxes, he’ll take home $842,700, and that’s before Mickelson pays his caddie, pays for his hotel and expenses, pays his agent, etc, with a bit over $1.3 million going to taxes.
Mickelson was ranked as Forbes’ #7 highest-paid athlete. This is the guy who said he might move away from California because of the state taxes there. No tears shall be shed for him. But man. Sixty-one percent is a lot of percent.
a scientific look at how we divvy up the work and the wealth, how some of us end up with too much or too little effort or reward. That’s partly due to Ricardo’s Law of Rent, showing how wasteful use of Earth cuts wages. And it’s partly due to how a society’s elite runs government around like water boys, dishing out subsidies and tax breaks. While geonomists look political reality right in the eye, without blinking, conventional economists flinch. When Paul Volcker, ex-chief of the Federal Reserve, moved on to a cushy professorship at Princeton cum book contract, the crush of deadlines bore down. So Volcker asked a junior associate to help with the book. The guy refused, explaining that giving serious consideration to policy would ruin his academic career. The ex-Fed chief couldn’t believe it and asked the department chair if truly that were the case. That head honcho pondered the question then replied no, not if he only does it once. And economics was AKA political economy!
what you do when you see economies as part of the ecosystem, following feedback loops and storing up energy. Surplus energy – fat or profit – enables us to produce and reproduce. To recycle society’s surplus, the commonwealth, geonomics would replace taxes with land dues (charged to users of sites and resources, including the EM spectrum, and extra to polluters), and replace subsidies with rent dividends to citizens (a la Alaska’s oil dividend). Without taxes and subsidies to distort them, prices become precise, reflect accurately our costs and values; then, motivated by no more than the bottom line, both producers and consumers make sustainable choices. While no place uses geonomics in its entirety, some places use parts of it, most notably a shift of the property tax off buildings, onto locations. Shifting the property tax drives efficient use of land, in-fills cities, improves the housing stock, makes homes affordable, engenders jobs and investment opportunities, lowers crime, raises civic participation, etc – overall it makes cities more livable. Geonomics – a way to share the bounty of nature and society – is something we can work for locally, globally, and in between.
a neologism for sharing “rent” or “social surplus” – the money we spend on the nature we use. When we buy land, such as the land beneath a home, we typically pay the wrong person – the homeowner. Instead, since land cost us nothing to make and is the common heri-tage of us all, rather than pay the owner, we should pay ourselves, our neighbors, our community. That is, we should all pay land dues to the public treasury, then our government would pay us land dividends from this collected revenue. It’s similar to the Alaska oil dividend, almost $2,000 last year. Indeed, the annual rental value of land, oil, all other natural resources, including the broadcast spectrum and other government-granted permits such as corporate charters, totals several trillion dollars each year. It’s so much that some could be spent on basic social services, the rest parceled out as a divi-dend, as Tom Paine suggested, and taxes (except any on natural rents) could be abolished, as Thomas Jeffer-son suggested. Were we sharing Earth by sharing her worth, territorial disputes would be fewer, less intense, and more resolvable.
a study of a phenomenon David Ricardo noted going on two centuries ago. When wine grapes rise to $10,000 a ton from the very best land (last year, cabernet sauvignon commanded an average of $4,021 a ton in the Napa Valley), then vineyard prices soar from $18,000 an acre in the 1980′s to $100,000 an acre five years ago and now for a top pedigree up to $300,000 an acre (The New York Times, April 9, via Wyn Achenbaum). Pricey land does not make wine pricey; spendy wine makes land spendy. While vintners make their wine tasty, nature and society in general – not any lone owner – make land desireable. Steve Kerch of CBS’s MarketWatch (April 5) notes that much of what a home sells for on the open market is a reflection of intangible factors such as what school district the house sits in. The price the builder has to pay for the land also tends to be driven by the same intangibles. Because the value of land comes from society, and because one’s use excludes the rest of society, each user owes all others compensation, and is owed compensation by everyone else. Sharing land’s value, instead of taxing one’s efforts, is the policy of geonomics.
more transformation than reform; it’s a step ahead. Harvard economics students this year did petition to change the curriculum, in the wake of the English who caught the dissension from across The Channel. French reformers, who fault conventional economics for conjuring mathematical models of little empirical relevance and being closed to critical and reflective thought, reject this “autism” – or detachment from reality – and dub their offering “post-autistic economics”. Not a bad name, but again, academics define themselves by what they’re not, not by what they are, unlike geonomists. We track rent – the money we spend on the nature we use – and watch it pull all the other economic indicators in its wake. We see economies as part of the ecosystem, similarly following natural patterns and able to self-regulate more so than allowed, once we quit distorting prices. To align people and planet, we’d replace taxes and subsidies with recovering and sharing rents.
an answer for Jonathan of the Green Party (Nov 7): “What does ‘share our surplus’ mean?”
Our surplus is the values that society generates synergistically. It’s the money we spend on the nature we use: on land sites, natural resources, EM spectrum, ecosystem services (assimilating pollutants). It’s also the money we pay to holders of government-granted privileges like corporate charters. We could share it by paying for the nature we use and privileges we hold to the public treasury then getting back a fair share of the recovered revenue. Used to be, owners did owe rent (“own” and “owe” used to be one word). And presently, some lucky residents do get back periodic dividends: Alaska’s oil dividend and Aspen Colorado’s housing assistance. Doing that, instead of subsidizing bads while taxing goods, is the essence of geonomics.
Jonathan: “Is local currency what you mean?”
Editor: It’s not. Community currency is a good reform, but every good reform pushes up site values. That makes land an even more tempting object of speculation. Now, any good will eventually do bad by widening the income gap – until you share land values.
a way to connect the dots. Making the cyber rounds is “The Cavernous Divide” by Scott Klinger, from AlterNet (posted March 21): “As the number of billionaires in the world expands, so does the number of those in poverty.” Duh. The yawning income gap is not news. Nearly every issue of our quarterly digest carries a similar quote. Yet the connection was worked out long ago by one of America’s greatest thinkers, Henry George, who labeled his masterpiece, Progress and Poverty. Techno- and socio-advances always enrich few and impoverish many. Yet progress also pushes up location values – the geonomic insight (is Silicon Valley cheaper now or more expensive?). Instead of taxing income, sales, or buildings, society could collect those values of sites, resources, EM spectrum, and ecosystem services via fees and dues, which would lower the income ceiling, and instead of lavishing corporate welfare, pay out the recovered revenue via dividends, which would jack up the income floor. Dots connected.
a POV that Spain’s president might try. A few blocks from my room in Madrid at a book fair to promote literacy, Sr Zapatero, while giving autographs and high fives to kids, said books are very expensive and he’d see about getting the value added tax on them cut down to zero. (El Pais, June 4; see, politicians can grasp geo-logic.) But why do we raise the cost of any useful product? Why not tax useless products? Even more basic: is being better than a costly tax good enough? Our favorite replacement for any tax is no tax: instead, run government like a business and charge full market value for the permits it issues, such as everything from corporate charters to emission allowances to resource leases. These pieces of paper are immensely valuable, yet now our steward, the state, gives them away for nearly free, absolutely free in some cases. Government is sitting on its own assets and needs merely to cash in by doing what any rational entity in the economy does – negotiate the best deal. Then with this profit, rather than fund more waste, pay the stakeholders, we citizenry, a dividend. Thereby geonomics gets rid of two huge problems. It replaces taxes with full-value fees and replaces subsidies for special interests with a Citizens Dividend for people in general. Neither left nor right, this reform is what both nature lovers and liberty lovers need to promote, right now.
a way to redirect all the money we spend on the nature we use – trillions of dollars annually. We can’t pay the Creator of sites and resources and are mistaken to pay their owners this biggest stream in our economy. Instead, as owners we should pay our neighbors for respecting our claims to land. Owners could pay in land dues to the public treasury, a la Sydney Australia’s land tax, and residents could get back a “rent” dividend, a la Alaska’s oil dividend. We’d pay for owning sites, resources, EM spectrum, or emitting pollutants into the ecosphere, then get a fair share of the recovered revenue. The economy would finally have a thermostat, the dividend. When it’s small, people would work more; when it’s big, they’d work less. Sharing Earth’s worth, we could jettison counterproductive taxes and addictive subsidies. Prices would become precise; things like sprawl, sprayed food, gasoline engines, coal-burning plants would no longer seem cheap; things like compact towns, organic foods, fuel cells, and solar powers would become affordable. Getting shares, people could spend their expanded leisure socializing, making art, enjoying nature, or just chilling. Economies let us produce wealth efficiently; geonomics lets us share it fairly.
as unfamiliar as geo-economics. The latter is a course some universities offer that combines geography and economics. A UN newsletter, Go Between (57, Apr/May ’96; thanks, Pat Aller), cited an Asian conference on geopolitics and “geoeconomics”. The abbreviated term ‘geonomics” is the name of an institute on Middlebury College campus and of a show on CNBC. Both entities use the neologism to mean “global economics”, in particular world trade. We use geonomics entirely differently, to refer to the money people spend on the nature they use, how letting this flow collect in a few pockets creates class and poverty and assaults upon the environment, and how, on the other hand, sharing this rental flow creates equality, prosperity, and a people/planet harmony. This flow of natural rent, several trillions dollars in the US each year, shapes society and belongs to society.